Trade, Military Cooperation to Top U.S.-India Talks

WASHINGTON, Jun 9 2012 (IPS) - The ambassador of India to the United States, Nirupama Rao, on Friday suggested that high-level talks between the two countries, taking place here next week, would focus on “development” and the “people aspect of cooperation”.

But the subtext of a blitz of public discussions indicate that much of the Strategic Dialogue, to be overseen by U.S. Secretary of State Hillary Clinton and Indian External Affairs Minister S.M. Krishna, will centre on issues of increased trade and military cooperation between the two countries.

The U.S. ambassador to India, Nancy Powell, who spoke alongside Rao on Friday at the Center for American Progress, a think tank here, suggested as much in late May, shortly after taking over her current post.

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While listing her “top objectives” as ambassador, Powell’s first two points were “Bolstering bilateral trade and investment and expanding business opportunities” and “Expanding our defence cooperation across all the military services and at all levels.”

Certainly relations between the two countries are far more conducive to both aims than ever before.

Now going into its third iteration, the U.S.-India Strategic Dialogue, which dates back to 2002, has marked an extremely fast warming of relations. For much of India’s six decades of independence, New Delhi and Washington were on opposite sides of the Cold War fence, India aligned with Russia and the U.S. fostering a relationship with Pakistan.

As India’s economic might grew during the late 1990s, and spurred particularly by an increasingly fraught relationship with Pakistan in the aftermath of the attacks of Sep. 11, 2001, the administration of George W. Bush began to place significant emphasis on strengthening relations with India.

There have been bumps along the way, including what U.S. officials this week referred to as India’s “strategic autonomy”.

In recent months, Washington and New Delhi have differed sharply over issues involving Libya, Syria and, most recently, Iran. Next week’s Strategic Dialogue takes place just days before U.S. sanctions against Iran are set to go into action, and Indian officials are expected to tell their U.S. counterparts that they will continue to purchase Iranian oil.

Trade, however, has remained a major benchmark of the U.S.-India relationship. Over the past decade, trade in goods and services has increased fivefold, from 18 billion dollars in 2001 to an estimated 100 billion by the end of this year.

In addition, India has been one of the fastest-growing investors into the United States, totalling 3.3 billion dollars in 2010.

In the near future, the India portfolios at the Overseas Private Investment Corporation and the Export-Import Bank, two of the United States’ most important overseas investment agencies, will be the largest in both institutions.

Much of this interest has come from energy, particularly as India is notoriously energy-strapped, and a special session will be devoted to energy at the Strategic Dialogue.

Yet while U.S. officials are keen to emphasise the amount of money going into bilateral research and development of clean energy, significant attention is also being given to two more controversial forms of energy, nuclear and so-called shale gas.

Following the 2008 signing of a highly contentious agreement between India and the United States on civil nuclear cooperation, U.S. companies are now anxious to begin reaping the benefits of the deal.

“U.S. civil nuclear firms are poised to play a significant role in the 40 billion dollar commercial nuclear sector as the Indian government seeks to add 14 new power reactors in the next five years,” Robert Blake, an assistant secretary with the State Department, said in Washington on Thursday.

Blake also announced that there was “a lot of looking at shale gas in India” by U.S. corporations, referring to the new technologies developed in recent years in the United States that critics say have poisoned groundwater reserves.

Two other core issues to take centre stage during the Strategic Dialogue have also led to public condemnation in the past, both in India and in the U.S.

First, while U.S. companies are hungrily eying India’s markets and requesting that caps on foreign investment be removed, recent attempts by multinationals to move into Indian cities have run into serious public blowback.

One of the most notable examples has been Wal-Mart’s joint venture, starting in 2007, which ran into widespread political and public opposition after small-scale shop owners complained of their business being cut by half.

The U.S. is currently pushing hard to finalise a bilateral investment treaty with India, a process that has been in the works for the past three years and included another round of discussion this week in Delhi.

According to Blake, the next few days will include “an intensified schedule” in an attempt to conclude the investment treaty during the Strategic Dialogue.

Second, in recent years Washington has indicated its desire to turn India into a close military ally, a push that has been ramped up following President Barack Obama’s recent announcement that U.S. policy would be “pivoting” towards Asia.

This week, during a trip to Asia that includes a stop in India, U.S. Defence Secretary Leon Panetta called “defence cooperation with India … a lynchpin in (U.S.) strategy”.

While reports suggest that Indian lawmakers were only lukewarm on Panetta’s overtures, numerous officials have confirmed that India is very interested in U.S. military hardware.

“Defence trade is an increasing part of our relationship,” Powell said on Friday, noting that bilateral trade in military equipment has already passed nine billion dollars.

“The next dimension will cover research and co-development,” Rao concurred.

Regardless of New Delhi’s appetite for closer ties with the U.S. military, inevitable momentum is picking up towards 2014, when most U.S. forces are slated to leave Afghanistan. Given the tone of recent conversations, this will almost certainly saddle India with increased responsibilities in the country, both economic and military.

“Any discussion of our strategic ties must begin with Afghanistan,” Blake said on Thursday, highlighting a significant shift in U.S. policy from just a few years ago – and one that is sure to be at the top of the agenda at next week’s talks.